Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice in Nigeria

International Journal of Trend in Scientific Research and Development (IJTSRD)

Volume 3 Issue 5, August 2019 Available Online: www.ijtsrd.com e-ISSN: 2456 – 6470

@ IJTSRD | Unique Paper ID – IJTSRD26639 | Volume – 3 | Issue – 5 | July - August 2019 Page 1124

Effect of Fiscal Responsibility Act on

Budgeting and Accountability Practice in Nigeria

Okegbe, T. O.

Department of Accountancy, Nnamdi Azikiwe University, Awka, Nigeria

How to cite this paper: Okegbe, T. O.

"Effect of Fiscal Responsibility Act on

Budgeting and Accountability Practice in

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ABSTRACT

This study examines the effect of the Fiscal Responsibility Act on budgeting

and accountability practice in Nigeria’s Fourth Republic. Specifically, the study

determines the relationship between the pre and post effect of the Reform Act

to ascertain if there is any significant difference in the management of the

nation’s fiscal operations. The study made use of secondary data obtained

from the Central Bank of Nigeria Annual Reports and Accounts, the Central

Bank Nigeria Statistical Bulletins and report of the Accountant –General of the

Federation as audited by the Auditor - General of the Federation for the period

under study. Six research questions and seven hypotheses were formulated to

guide the study. The data generated for this study were presented in tables,

graphs and mean scores and analyzed using the Statistical Package for Social

Sciences version 22. The hypotheses were tested using the T-test of difference

and the Pearson Correlation (r). Results revealed among others; that the

number of months of default on the publication of Federal Government

Audited Accounts was reduced in the post-Fiscal Responsibility Act era. Again,

there is a significant negative trend in the mean corruption index after the

introduction of the Act and that actual capital expenditure is more closely

related to capital expenditure budget in the post than pre-Fiscal Responsibility

Act period. Based on the findings, we recommended that budgeting and

accountability practice should be made more proactive by imbibing the culture

of timely auditing and reporting standards as stated in sections 49 and 50 of

the Fiscal Responsibility Act, 2007.

KEYWORDS: Fiscal Responsibility Act, Budgeting and Accountability Practice

INTRODUCTION

Nigeria operates a mixed economy made up of the public

sector (government and its activities) and private sector

(privately owned part of the economy). In such a planned

economy, the public sector has the commanding rights of the

economy and takes all major decisions including those for

the private sector,(1999 Constitution, section 16: sub-

section 1,2 and 4). However, in the second half of the last

century, some radical changes in management style,

information technology, methods of decision making,

budgetary procedure, accounting systems’ performance,

among others, took place in the private sector economy of

some developed and developing economies of the world.

These changes brought with it improved efficiency and

effectiveness in running the privately owned part of the

economy.

In the recent past, some countries like the United Kingdom

(U.K.), Australia, New Zealand, Canada and even Ghana

began to adopt different levels of implementation of this new

private style of management into public sector governance.

Some countries, however, were skeptical using them on the

reason that the new tools and accounting systems were

appropriate for only private business organizations which

aims at making a profit in contrast to public sector objective

(Ouda, 2003).

Here, governments are expected and requested to be

cautious, mindful, transparent and accountable in their duty

of providing services to the public. It also means that there

should be an emphasis on strategic control of aggregate

spending and priority setting; and the facilitation of greater

efficiency and effectiveness via delegation of management

authority with accountability for results (Ouda,2003). This

actually requires the government to introduce some radical

changes in the public administration system in line with the

private sector style for improved, efficient, transparent and

result oriented service delivery to the citizenry. The

introduction of SAP exacerbated the already deplorable

situation of austerity measure. The reform led to cut in the

take-home pay of workers; massive retrenchment of

workers; high cost of living and removal of subsidies, among

others (Nwagbara, 2011). The implementation of this

comprehensive economic reform program was in four areas:

Macroeconomic Reforms, Structural Reforms, Government

and Institutional Reforms and Public Sector Reforms

(Okonjo Iweala & Osafo-kwaako, 2007). These areas of

economic reforms were interlocking and actually form a

continuum, intended to work together to achieve the

common goal of better or more transparent management of

public resources, probity and accountability towards

economic growth.

Budgeting and accountability practices in the first and

second-generation reforms had no recourse to the weak

public service delivery, inefficiency, waste, corruption and

misappropriation of public funds. The idea of Public Sector

Reforms (PSR) was, therefore, initiated against the

background that the government required a departure from

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its old traditional method of running administration and the

urgent need for renewed public sector services to propel

government in its quest for sustainable socio-economic,

political and technological development, as such, there is the

need for structural re-engineering of the public sector with

the infusion of new spirit, value, professionalism,

accountability, responsiveness and focused sense of mission

for maximum efficiency of the economy (Omoyefa, 2008).

At the inception of the democratic government in 1999, the

morale of Nigerians were at the lowest ebb as a result of

total decay of infrastructure, malfunctioning of public

utilities, a high level corruption, general waste, inefficient

state enterprise, soaring inflation and a high level of

`unemployment among others (NEEDS, 2004 ).

In the Nigeria public sector, lack of financial accountability

and probity, lack of performance-oriented budgeting, virtual

institutionalization of corruption at all levels and segments,

disregard for rules and regulations, the general decline of

efficiency and effectiveness (Adegoroye, 2008) were noted

among the major ills militating against the nation’s economic

growth. The above situation necessitated the need to

develop a model(s) for effective control and performance

evaluation criteria.

As part of the public sector reform, government in 2007

came up with the idea of the Fiscal Responsibility Act (FRA)

to help improve efficiency through budgeting, fiscal

accountability and transparency in the public sector service

which will in turn translate to improved economic and

development indicators like the real Gross Domestic Product

(GDP), rate of inflation, citizen welfare in terms of life

expectancy, Corruption Perception Index (CPI) and other

Human Development Index (HDI).

Okonjo-Iweala & Osafo-kwaako (2007) observed that poor

public expenditure management in Nigeria has greatly

hampered the quality of government capital projects. This

has resulted in poor services delivery to the citizenry. They

further argued that strengthening the budget preparation

and execution process was urgently needed in order to

improve the efficiency of government spending and improve

service delivery in the state. They noted that weakness in

budget implementation and monitoring had in the past

resulted in low quality of government expenditure and many

other incomplete projects.

The International Budget Partnership (IBP) in 2008

conducted a study on 25 countries, including Nigeria, on-

budget performance and discovered that Nigeria provided

scant or no budget information to enable the public hold the

government accountable for managing their money. In that

study, Nigeria scored 19 percent on a scale of 1 to 100

percent in the Open Budget Index (2008). Again, in 2010,

Nigeria scored 18 percent while Liberia scored 40 percent

and Ghana 54 percent, (www.openbudgetindex.org). The

objective of the above study according to the Director of IBP,

Warren Krafchill, is to promote increased public access to

government budget information as this can lead to concrete

improvements in people’s lives.

Osisoma (2013) observed that in Nigeria, the evidence of

poor public financial management has manifested in

crippling debts burdens, low credibility of enacted budgets,

poor links between policy priorities and the inputs that are

funded by public resources, and the high cost of wastage and

corruption. He opined that good budgeting demands sound

institutions governing the allocation of funds, budget

execution system that provides assurance on the operators

within the rule of law, accounting systems that have integrity

and audit systems that provide assurance on the quality of

financial information and systems.

The military has been blamed for extra budget spending and

blatant disregard to budget rules (Ben-caleb & Agbude,

2013), what about the civilian administration with the

entrenchment of the Fiscal Responsibility Act? The problem

of this study therefore is to find out if the implementation of

the Fiscal Responsibility Act by the civilian government of

the fourth republic has any significant effect on budget

spending and accounting in Nigeria public sector.

The main objective of this study is to assess the

implementation of the Fiscal Responsibility Act (FRA) so as

to determine its effect on budgeting and accountability in

Nigeria. The specific objectives are;

1. To establish whether the implementation of the Fiscal

Responsibility Act has led to the timely publication of

Audited Accounts of the Federal Government of Nigeria.

2. To ascertain if the implementation of the Fiscal

Responsibility Act has reduced corruption index in

Nigeria.

3. To investigate whether the implementation of the Fiscal

Responsibility Act has reduced the percentage of public

debt service to total revenue of the Federal Government

of Nigeria.

REVIEW OF RELATED LITERATURE

Conceptual Framework

The Concept of Public Sector Reforms (PSR)

The public sector represents that portion of a nation’s affairs,

especially economic affairs that are controlled by the

government or its agencies. It is the sector of the economy

regulated by the government to provide certain goods and

services to the entire populace at a reasonable price. In

addition to the general government, the public sector

includes entities that are majorly owned by the government

including the state-owned enterprises and financial

institutions. It is highly centralized and its instrumentality is

the public administration systems which emphasize

compliance with written rules and regulations (Ouda, 2004).

The researcher noted that in most African states, the public

sector focuses on input rather than output. It actually

complements the role of the private sector and remains

pivotal to private sector socio-economic development in any

developing economy. It is run by government bureaucrats,

who carry out government programs essentially in

compliance with a set of rules and regulations, characterized

by a system that lacks clear performance measurement and

so, lack incentive to encourage efficiency and effectiveness.

This is a replica of the Nigeria public sector where

inefficiency, waste and corruption are the order of the day.

In-so-far as the Nigerian public sector could not perform

effectively due to the accumulation of excessive power, lack

of accountability and representation, indifferences towards

public need and demands, official secrecy and inaccessibility,

and roles in depoliticizing the public sphere, the need for

reform emerged.

Public sector reform is about improving how government

departments or agencies functions internally; how they



interact with each other, with their political bosses and with

the citizen they purport to serve and ultimately how they

deliver public goods and services. It could be total or partial

shedding of some seemingly obligatory government

businesses and interests in enterprises such as transport,

housing, communication, banking, power and energy among

others, (Nethercutt 2003; Adegoroye, 2005).

Omefeya (2008), defined it as the total overhaul of

government administrative machinery with the aim of

injecting real effectiveness, efficiency, hardcore competence

and financially prudence in the running of the public sector.

This means that the public sector may be poorly organized,

its decision processes may be irrational, accountability may

be weak, public programs may be poorly designed, public

goods and service poorly delivered and democracy dividend

delivered only on papers, radios and televisions, and so,

public sector reform is an attempt to fix these problems.

Schacter (2000) saw public sector reform as “strengthening

the way the public sector is managed” This presupposes that

things are not properly managed in the public sector, that

unnecessary wastages have crept into the ways the public

sector ought to be run and that too many people are doing

poorly what few people can do effectively.

It has also been described as one of the elements of

economic reforms (Wynne, 2007, Ouda, 2004). The whole

ideas are that since the economy grew and societies become

differentiated, the government conventional way of

regulation, allocation and redistribution of goods and

services has to be changed for better.

The public sector, therefore, requires a restructuring of

norms, rules and institutions, operating in the system, such

that market forces will allocate resources efficiently in order

to promote individual self-interest for the good of the

society. Increasingly now, the focus is the need for the

government to demonstrate quality improvements and value

for money in public services; this entails role changes and

impacts on public and private sector relationship. It is a

process in which private-sector style management approach

are introduced into the public sector (Wynne, 2007)

Reasons for Public Sector Reforms

In many countries of the world including Nigeria, several

factors have led the government into adopting public sector

reforms. According to (Ouda, 2004), public sector reforms

are carried out to address economic crises or to meet some

challenges brought about by increased globalization. A

number of countries have made significant progress after

their adoption of the public sector reforms in the past three

decades. The new Zealand, United Kingdom (UK) and

Australia were among the first to start (Ouda, 2004), Canada

and United State of American (USA) and some developing

countries of African like Ghana, Kenya, Tanzania, Uganda and

Zambia have since joined the league.

Some of the factors that have lead many of these countries

into undertaking public sector reforms are discussed below:

Economic Crises:

Economic crises result from wrong or misapplication of

economic policies and tools such that the desired objectives

of the public sector are not achieved. Many professionals

have argued that economic growth is the prime engine of

development, but despite enormous investment in economic

growth programs, many countries do not experience the

economic growth the program designed to achieve, nor do

they improve in other key development indicators (O’Brien,

2003). The major symptoms of an economy in crises include

sick and non-performing economy and public institutions,

unfair and unaffordable social policies, as well as financial

deficits (Ouda, 2003).

Nigeria is about the most challenged developing countries of

the world because, despite being the world’s sixth-largest oil

exporter, the nation is far the world’s most populous poor

country. With an annual GPD growth of about 2.25 percent

and estimated population growth of 2.80 percent per annum,

there has been a contraction in per capital GDP over the

years that has resulted in a deterioration of living standards

for most citizens,(Okonjo-lweala & Osafo-kwaako, 2007;

King, 2003). King (2003), has described Nigeria as a country

of spectacularly failed economic policies, rising poverty and

return to subsistence, with public utility services that are

among the worst in the world … at least two-thirds of the

household are not connected to electricity; half of the adult

population are not literate; access to water is extremely

limited, and so on.

Demand for Accountability in Government.

There has been growing and louder public demands for

accountability in government. According to Walsh (1995),

the elements of accountability exist in any relationship

where one party (an agent) performs some functions on

behalf of another party (the principal). An agent, according

to him, is one to whom the principal delegates power and

entrusts resources for safeguarding (stewardship) or to

carry out specific tasks on behalf of the principal.

Accountability in this means that the context agents have to

properly demonstrate that they have exercised the power

conferred, achieved the goals and objectives and used the

resource provided effectively and efficiently.

Nigeria’s open budget performance shows that Nigeria

scored 20 percent in 2006, 19 percent in 2008, 18 percent in

2010 and 16 percent in 2012 thus recording a very poor

performance when compared with an average score of 43

percent for all 100 countries surveyed. In 2010, Ghana

scored 54% and Liberia, 40%, (Open budget survey), (2010)

www.openbudgetindex.org.

Corruption

Corruption is a major impediment to development (Walter,

2003). It thrives where there is no transparency and proper

accountability. The fight against corruption is critical

because corruptions are pervasive and affect all sectors and

areas in the development of any economy (Maldonado,

2003).

Corruption erodes trust and confidence in the political

system. It also inhibits investment and job creation

(Maldonado, 2003; O’Brien, 2003, Walter; 2003). Therefore,

any political system that seeks to function effectively must

have the political will to fight corruption as this gives

credibility and legitimacy to the government of the day.

Corruption also curtails the ability of governments at

Federal, State and local to finance and provide social services

such as education, health, water etc (Okonjo & Osafo-

kwaako, 2007; Maldonado, 2003; O’brien, 2003; Walter,

2003). It prevents the participation of civil society in the

oversight of how public resources are utilized (Maldonado,



2003; O’Brien, 2003). The fight against corruption is not an

event, but a long-term and complex process that requires

firm commitment and determination in addition to a

permanent partisan with an active attitude from all

stakeholders, (Maldonado, 2003).

A bane of Nigeria’s existence since the oil boom of the ’70s

has been the reputation for corruption. Corruption is a

precept of poor governance which negatively affects growth

and distorts the climate for doing business and serves as a

tax on private investment, (Okonjo-Iweala & Osafo-kwaako,

2007). The significant additional costs that poor public

services impose on the Nigerian business sector

fundamentally comprise a country’s ability to develop (King,

2003).

Analytical studies conducted by Okonjo-lweala & Kwaako in

(2007) on the extent of corruption in Nigeria prior to the

recent reforms showed a negative trend, for example, the

report on “Nigeria‘s Economic reforms: progress and

challenges” (2007), shows that a survey of Nigerian firms in

2002 revealed widespread bribery and corruption across

various public institutions. According to the survey, about 70

percent of firms reported the need to give bribe to obtain

trade permits; about 83 percent paid bribes to obtain utility

services; about 65 percent paid bribes when paying taxes; an

estimated 90 percent paid bribes during procurement; and

70 percent of firms acknowledged the need for bribes to

obtain favorable judicial decisions. Also, there was a

widespread perception of the leakage of public funds

(Kaufmann et al, 2005). The popular “1.M” syndrome was so

much invoked for one to obtain any government assistance.

Additionally, 100 percent of Nigerian firms surveyed agreed

that public funds were diverted to private groups in contrast

to about 78 percent of firms in Russia, and about 45 percent

of firms in South Africa (Okonjo-Iweala & Osafo-Kwaako,

2007).

Public Sector Reforms and the Nigeria Economy

Economic growth is central to public sector reform

performance in every developing country. Before the fourth

republic of 1999 in Nigeria, there was, inter alia, the failure

and virtual collapse of governance, contamination of

democratic values, social-political and economic decay,

hence, the need for reforms aimed at providing greater

transparency and accountability of public institutions and

government operations to urgently redress these

circumstances. The government then, under President

Obasanjo, believed that only a well designed public sector

reform on budgeting and accountability targeted at

improving the economy positively can reverse the wrong

trajectory of our national integrity journey. Also in 2007, the

Fiscal Responsibility Act was instituted to further strengthen

the Nigerian economy through regulated budgeting and

accountability practices.

Table2.05: Nigeria budget and some selected macroeconomic indicators (1999-2013)

Year

Total

budget

(N)

Budget

Deficit

Real

GDP

(%)

Inflat

ion

rate

(%)

Unemp

loymen

t rate

(%)

Pove

rty

rate

(%)

Life

expectancy

At birth

(yrs)

Human

Developme

nt Index

(HDI)

Corruption

Perception

Index

(CPI)

Exchan

ge rate

N/Dolla

Total

external

debt (N) M

1999 0.524 b 285104.7m 2.8 6.6 12.0 70 54 0.410 98/99 92/69 2577374.4

2000 0.705tr 103.8m 3.9 6.9 13.1 70 46 0.445 90/90 102.11 3097383.9

2001 0.894tr 221.0m 4.2 18.9 13.6 68 46 0.463 90/91 111.94 3176291.0

2002 1.064tr 301.4m 4.0 12.9 12.6 65 46 0.466 101/102 120.97 3932884.8

2003 1.446tr 202.7m 3.7 14.0 14.8 63 48 0.453 132/133 129.36 4478329.3

2004 1.189tr 172.6m 6.5 15.0 13.4 55 48 0.456 144/146 133.50 4890269.9

2005 1.80tr 161.4m 6.9 17.9 11.9 54.5 49 0.429 152/168 132.15 2695072.2

2006 1.90tr 101397.5m 5.3 8.5 12.3 55.1` 50 0.438 153/180 128.65 451461.7

2007 2.30tr 117237.2m 6.1 5.4 12.7 60.5 50 0511 147/180 125.83 431079.9

2008 3.58tr 47378.5m

47.4b 6.0 11.6 14.9 63.6 50 0446 121/180 118.57 523254.1

2009 3.76tr 810.01b 7.0 12.5 19.7 61.2 51 0.449 130/180 148.88 590437.1

2010 4.61tr 1264.5b 7.9 13.7 21.1 69 51 0.454 134/178 150.30 689837.5

2011 4.484tr 1287.8b 7.4 10.8 23.9 71.5 52 0.459 143/183 153.86 896849.6

2012 4.70tr 1168.1b 6.6 12.2 23.3 70.5 52 0.471 136.176 157.50 1026903.9

2013 4.897tr 1.037tr 6.8 9.8 29.6 62.6 52.4 0.504 144/177 158.00 NA

Key: E = estimate; m= million; b= billion; tr= trillion; N = naira; %= percentage

Sources:

1. CBN annual report and account for several years

2. National Bureau of Statistics (NBS) in CBN statistical bulletin of (2005) vol. 16, (2009) vol. 20, (2012) vol. 23

3. World Bank Report for several years.

4. CIA World Factbook 2013.

Debt Service/Gross Domestic Product (GDP) and Nigeria

Economy

The Federal Government of Nigeria in the effort to meet up

with economic demands most often overshoots the budget

thus creating room for deficit financing. This situation could

be financed through debt financing, an increase in tax and so

on. Debt financing is an injection of money into the economy

through borrowing either internally or externally.

In recent times, developing countries seek debt financing as

an option to finance budget deficit because it is assumed to

be a catalyst in promoting economic growth. However,

excessive borrowing which at times leads to rising in fiscal

deficit financing is unhealthy to the growth of any

developing economy as this often leads to high debt services

that negatively affect the Gross Domestic Product (GDP).

In Nigeria, the burden of fiscal financing in terms of debt

servicing rose relatively and absolutely over the years,

increase in total revenue notwithstanding, however, the

percentage of debt service to total government revenue

appear to be closely related after the introduction of the



Fiscal Responsibility Act in 2007. Again, the real Gross

Domestic Product actual and targeted, are closely related in

the post Fiscal Responsibility Act than pre-Fiscal

Responsibility Act period.

The Role of FRA in Nigeria Economic Development

Nigerian experience in economic development can be traced

to the 1940s when the British colonial office in London

requested the colonies to prepare development plans which

would assist it in disbursing the colonial development and

welfare funds. This gave rise to the adoption of the

perspective plan, the medium-term plan and the annual plan.

The perspective plan generally plots or charts the long term

plan of the economy by setting out the broad-based

guidelines and objectives to be pursued within a time frame.

Most often, it covers a long period of between 10-20 years or

more. This is a replica of the Nigerian 20:20:20 economic

plan.

The medium-term or rolling plan is used as an

implementation instrument for the perspective plan. The

main task of the medium-term plan is to translate the broad

guidelines and objectives of the perspective plan into specific

targets and more measurable and quantifiable goals within

the period. The Nigeria Medium Term Expenditure

Framework (MTEF) covers a period of three years plan.

The annual plan is the yearly segment of the medium-term

or rolling plan and sets out in more details the projects and

programs in the medium-term or rolling plan and the

financial implications of the methods or operations

necessary to fulfill the set goals, (Eyiuche, 2000). The annual

plan represents the yearly budgets by the Nigeria

government.

Therefore, it can be said that the perspective plan, the

medium-term or rolling plan and the annual plans or

budgets are interwoven and one being used to achieve the

other without conflicting with each other.

The FRA as a reform program drew its inspiration from the

above economic policy practices and this informed the

adoption of the medium-term Expenditure Framework

(MTEF) as enunciated in NEEDS. Through the MTEF, the Act

provided the three year –work- plan or framework for the

implementation of public sector reform started by Obasanjo

administration. It is perceived to be the latest and most

potent legal instrument which can be used to lay a lasting

legacy in the public sector reform efforts (Olaniyi, 2006).

This reform effort is expected to strengthen Nigeria’s

economic growth, but to what extent?

The Act also brought the introduction of performance

indicators to help decision-makers focus on results, Act

11(3)a and 19(b). The emphasis is no longer on inputs alone

as this Act (section 19(d) and (e) effectively creates an input-

output dimension in the resources management by the

economy. It also demands transparency and accountability

on matching results with objectives and resources utilized

sections 48, 49 and 50.

The FRA among other things, established the Fiscal

Responsibility Commission charged with the responsibility

of monitoring and enforcing the provisions of this act

towards greater accountability, transparency and prudence

in the management of the Nation’s resources by Federal

Government on government-owned corporations or

companies and agencies as provided for under sections 13,

16(1), and (2) and item 60 of the Exclusive Legislative list as

set out in Part I of the second schedule to the 1999

constitution of the Federal Republic of Nigeria.

Fiscal Responsibility Act (FRA) and Budgeting In Nigeria

Budgeting is a systematic and formalized approach for

accomplishing planning, co-ordination and control

responsibilities in the management of organization or

business. It is a process of preparing in advance of the period

to which it relates, a summary statement of plans expressed

in quantitative terms which if utilized with sophistication

and good judgment would enhance the attainment of the

organization or public sector objectives. Such plan quantified

in monetary terms, prepared and approved prior to a

defined period of time, usually showing planned income to

be generated and or expenditure to be incurred during that

period, and the capital to be employed to attain a given

objective is called the budget Lucy, (1984) as cited in

Osisioma, (1990). It is a financial plan that sets forth the

resources necessary to carry out activities and meet financial

goals for a future period of time (Anyafo, 2000). It is

annually derived from the medium-term expenditure

framework, FRA (2007, part 111)

In all, a budget helps instill into public officials, government

corporations and agencies the habit of careful evaluation and

make possible the control over operations, revenues and

costs, and also over the persons responsible for the

operations. This functions to promote the efficiency of

operation and prevent waste in the economy. Again,

government responsibilities are cost-oriented (government

expenditure) and since resources are not always adequate to

fund these activities that address various socio-economic

and political needs of a country, a formal statements of

revenue and expenditure at a future date (Budget) must be

made as a matter of constitution thereby paying attention to

critical areas of development needs and maximize limiting

factors, (Wildavsky and Caiden, 1977 in Okpala, 2012).

2.3.1 The Nigeria Budgeting Experience

Budgeting in African countries has witnessed a lot of

revolutions within the last few decades yet no meaningful

developments have been experienced, (Mhome, 2003). At

the end of every year, huge sums are budgeted and spent in

Nigeria with unacceptable levels of economic growth and

developments. According to Ajakaiye & Akinibinu (2000),

poor level of accountability of public resources became

alarming and this can be traced to the ineffective budgeting

system and poor regulatory framework.

However, Nigeria traditional line-item budgeting process

reflects the concern over safeguarding public funds and

control which has characterized budgeting and financial

management in government for generations, hence

conventional budgeting. The foundation of this budgeting in

Nigeria was laid in 1914 when the Northern and Southern

protectorates were amalgamated under the administration

of Lord Fredrick Lugard. The governments accounting

principles and practices applicable in England then were

adopted by the administrators of the Nigerian colony for

reporting to the home office in London. Worthy of note is

that the colonized ‘father’ has since moved from the input-

oriented budgeting system to different types of output-

oriented budgeting system at different times which included



program budgeting, performance budgeting, program –

performance budgeting, planning programming budgeting

and Zero-based budgeting system.

Despite its widespread use, the incremental budgeting

technique has been criticized for encouraging spending

rather than economizing as controllers of vote feel

compelled to exhaust all their appropriations whether

necessary or not since performance evaluation tends to be

focused upon spending and an accounting officer is assumed

to be effective as long as the expenditure is within budgeting

limits. Again, a ministry or departments’ subsequent budget

will be reduced if it spends less than what was allocated for

in a given year. Deficit budgeting is encouraged instead.

The 1974 public service review commission in Nigeria

indicted the incremental budgeting technique as follows:

under the traditional budgeting system, there is no

indication, except sometimes in development estimates, of

what output is to be achieved, how many miles of rail or

roads will be laid, the number of acres of land to go under

irrigation, the tons of produce to be exported, the number of

classrooms to be built. The senior management team cannot

measure the performance of a public servant nor hold him

accountable for it since funds are not allocated on that basis.

When a ministry or an enterprise seeks an extra allocation of

resources, there is no ready means of telling whether this is

proportion to the extra work to be performed or to the

output of other department performing similar activities.

Neither does the public servant know what output is

expected of him. He is likely to be judged more by how little

money he has spent than by how much he has received,

over-spending a vote is more apparent and blameworthy

than falling short of a target. This puts a premium on

inactivity, (Udoji Report, 1974).

Traditionally, the budgeting process in Nigeria which has

been basically incremental in nature has often not been able

to address the unique challenges of the times. The current

capital budget must be able to address the challenges of

economic transformation. These include growing globally

competitive firms, world-class infrastructure, innovative and

productive workplaces. The budget has to contribute

towards making Nigeria an internationally competitive

country.

Timely Publication of Accounts and Budget Practice

Periodicity concept in accounting demands that revenue of

any particular accounting period must be matched with the

cost incurred in the process of generating that revenue for

proper accounting information. As such, fiscal and financial

information made available on a full, regular and timely basis

is an important ingredient of an informed government. In a

democratic government, preparing timely financial reports

allow interested citizens, taxpayers, investors and other

constituents to access decision-useful information that can

be used to make a range of important decisions regarding

housing, schools, voting and the services they receive in

return for their tax. Time, therefore, is of the essence in

accounting as financial information is required by users of

such information for varied decision making. Besides,

transparency and accountability are assured to a greater

extent; hence, timely publication of accounts is critical in

achieving good financial reporting standard in governance.

Suffice it to say that an essential element of financial

reporting is that it communicates information in time to be

used to inform decisions and to hold government officials

accountable.

The Fiscal Responsibility Act of 2007, section 48 made it

clear that the Federal Government of Nigeria shall ensure

that its fiscal and financial affairs are conducted in a

transparent manner and accordingly ensure full and timely

disclosure and wide publication of all transactions and

decisions involving public revenues and expenditure and

their implications for its finances. Such timely, clear and

open process in budget practice/ government businesses

will no doubt bring about the integrity of financial

information and forecasts by the government.

In this study, the researcher wishes to find out the extent to

which the implementation of the Fiscal responsibility Act has

improved the timely publication of audited government

accounts for the period under study.

Fiscal Responsibility Act (FRA) and Accountability.

The Nigerian public sector reforms program, according to

NEEDs (2004) was to curb corruption, reduce waste and

inefficiency, establish the right set of values, and discourage

rent-seeking and other unproductive values in the

debilitating public sector by engendering the culture of

accountability into government fiscal operations. Again, in

2007, the fiscal responsibility Act was passed into law to

help allay the fears of non-adherence to basic ethics in

governance, specifically with regards to providing prudent

management by the nations’ resources, ensuring long-term

macro-economic stability and securing greater

accountability and transparency in its fiscal operations.

Democratic Control: Each of these principals in the above

chain of delegation wants to control the exercise for the

transferred powers by holding the agents to account. At the

end of the line of accountability, relations stands the

citizenry who judge the performance of the government and

can sanction their political representatives by voting them

out in a good democratic system. Public account giving,

therefore, is a necessary condition for the democratic

process, because, in the end, it provides political

representatives and voters with the necessary inputs for

judging fairness, effectiveness and efficiency in governance.

Integrity: Accountability functions to enhance the integrity

of public governance. The public character of the account

giving is a safeguard against corruption, nepotism, abuse of

power and such other forms of inappropriate behaviour.

Rose-Ackerman (1999) said the assumption is that public

account giving will deter public managers from secretly

misusing their delegated powers.

Improved Performance: Public accountability is meant to

foster institutional learning. Accountability is not only about

control, it is also about preventing wrongs towards achieving

rights. Norms are produced and reproduced, internalized

and where necessary, adjusted through accountability. The

manager who is held to account is told about the standards

that must be held on to and about the fact that in the future

he may again (and in that case, more strictly) be called to

account in connection with his conduct. In such cases,

outsiders are often addressed as well, particularly those

outsiders likely to find themselves in a similar position to

that of the person or persons being called to account.



Legitimacy: Together, these three functions provide the

fourth function of public accountability, to maintain or

enhance the legitimacy of public governance. In the

developed world, the exercise of public authority is not taken

for granted. Public accountability, in the sense of

transparency, responsiveness and answerability, functions

to enhance the public confidence in government and to

bridge the gap between governed and government.

Accountability and Transparency Relationship

The concept of accountability refers to the legal and

reporting framework, organizational structure, strategy,

procedures and actions to help ensure that organization,

institutions and groups;

A. Meet their legal obligations with regard to audit

mandate and required reporting with their budget.

B. Evaluate and follow up performance as well as the

impact of audit

C. Report on the regularity and the efficiency of the use of

public funds, among others.

Transparency on the other hand, is a powerful force that

when consistently applied can help fight corruption, improve

governance and promote accountability; hence,

accountability and transparency are two important elements

of good governance or administration.

Osisioma (2008) opined that the twin concept of

accountability and transparency is rooted in the basic ethical

foundation of good governance in any democratic polity,

noting that accountability is the heart and soul of good

governance and transparency is the reinforce, and together

they represent the Siamese twins of public sector

administration. The notion of transparency refers to the

timely, reliable, clear and relevant public reporting on its

status, mandate, strategies, activities, financial management,

operations and performance.

To achieve accountability and transparency, the following

principles are necessarily required:

1. Performance of duties under a legal framework that

provides for accountability and transparency. The

organization should have to guide legislation and

regulations in terms of which one can be held

responsible and accountable. Such legislation and

regulations shall cover;

A. Audit authority, jurisdictions and responsibilities

B. Conditions surrounding appointment, selections and

removal of leaders and members of collegial bodies.

C. Operating and financial management requirements

D. Timely publication of audit reports etc.

2. The need to make public basic information regarding

mandate, responsibilities, mission, strategy and

relationship with various stakeholders, including the

legislative bodies and executive authorities.

Empirical Review

A lot of research works relating to the topic of our study

have been done in the past by some eminent scholars.

Ogujiuba, Ezema and Omoju (2013) carried out an

assessment on the Medium-Term Expenditure Framework

(MTEF) and Fiscal Management in Nigeria. The objective of

the study was to review the MTEF and budget Performance

in Nigeria for the period 2005-2008 and identify the

challenges undermining the effective operation of the

budgetary process. The study considered budgeted versus

actual expenditure and assessed the MTEF performance for

the period under review. Findings revealed among others,

that the public finance in Nigeria has not been operated

within the specification of the MTEF and the priorities

expressed in the budget are not always in sync with the

national objectives. It also identified some challenges to

effective public expenditure management to include large

scale corruption, deviant budget execution, monitoring and

reporting.

Also, Onuorah and Appah (2012) studied accountability and

public sector financial management in Nigeria using

Ordinary Least Square (multiple regressions) to analyze

federal government revenue, recurrent and capital

expenditure relationship. They found out that there is

complete obscure of good roads, hospital, water supply,

electricity among other basic infrastructure in the country.

This is so because of the complete absence of accountability

and transparency in the effective and efficient management

of public funds by public office holders in the country. This

goes to show that the Nigeria budget and expenditure

framework is recurrent expenditure driven.

Osisioma(2013) in a paper on Budget, Auditing and

Governance: Implementing the accountability framework

opined that good governance is rooted in quality institutions,

informed and adequately motivated citizenry, and structures

and processes that endure. He noted that the budget and

audit tools are critical to the processes, and within the

requirements of the accountability framework can bring the

so-called dividends of democracy to citizenry. In the final

analysis, he said that governance is enhanced by creative

oversight and accountability.

Nwankwo (2014) made an empirical study to investigate the

impact of corruption on the growth of Nigeria economy

using Granger Causality and regression techniques. The

study used the Gross Domestic Product (GDP) as a proxy of

economic growth and corruption index. Findings show that

the level of corruption in Nigeria over the years has a

significant negative impact on economic growth.

Ettah (2012) examined the effect of corruption on economic

development in Nigeria. The study sought to assess the

virulent effect of corruption on economic development in

Nigeria and to investigate the root causes of corruption and

why it exacerbated in the economy. The study developed a

model called the Corruption-Internet model to graphically

portray the inter-relationship of the various sectors in the

economy of corruption. The paper identified some culpable

factors which probably gave vent to corruption in Nigeria.

Osisiom (2012) in his work on combating fraud and white-

collar crimes: lessons from Nigeria, observed that fraud is

systemic in Nigeria with the ordinary citizen being

compelled to be either a liar, a cheat or an outright thief,

noting that fraud has stultified growth and national

development, subverted the nation’s values and norms,

generated a culture of illegality and impunity in public

service and almost fritted away the promise of the nation’s

culture. He opined that what is needed is a strong

accountability framework, an integrity system that is

efficient in design and effective in operation.

Ojong and Owui (2013) carried out a study on the effect of

budget deficit financing on the development of the Nigeria

economy. The main objective of the work was to investigate



the influence of government budget deficit financing on

economic development in Nigeria. The ordinary least square

regression was used to estimate equations formulated for

the study. Findings revealed that there exists a significant

relationship between budget deficit financing and economic

growth in Nigeria. It also found out that there exists a

significant relationship between GDP and government

expenditure, among others.

In an unpublished paper presented by Aliyu Jibril at the

workshop on the process and procedure for obtaining

foreign loan for the federal and state governments held in

Abuja on 8th June, 2010, it observed that the cost of servicing

the debt increased at a disturbing rate before the

introduction of FRA. It rose from 7.11 percent in 2004 to

31.28percent in 2005 and 46.35 in 2006 when the

government intervened to pay off the Paris Club debt and

dropped to 14.32 percent in 2007 only to rise to

18.95percent in 2008. He noted that the growth of the total

debt service is rather fluctuating; the behavior of the cost of

debt service seems not to indicate the presence of fiscal

responsibility during 2005-2009.

Summary of the Literature

The review of literature related to this study was carried out

under six major subheadings namely the conceptual

framework, the Fiscal Responsibility Act (2007), public

sector reforms and budgeting, public sector reform and

accountability, theoretical framework and the empirical

review. An alternative for control that offered positive result

would, therefore, be needed. None of the researchers, to the

best of our knowledge, in the literature had examined the

application of budgeting and accountability practice in the

public sector as the basis for all reforms. This was the gap

the researcher needed to be filled. Core budgeting practice is

observed in the nations’ fiscal management will lead to all-

round improvements in the country’s macroeconomic

indicators’ performance.

METHODOLOGY

Research Design

The research design adopted in this work is a non-

experimental Ex-Post-Facto research design with time-series

properties. This is because the research seeks to find out the

factors that are associated with certain occurrences,

outcomes, conditions or types of behavior by analysis of the

past events or of already existing conditions. In such

research work, the researcher has no control over certain

factors or variables and as such, cannot manipulate or

change them, (Akuezuilo & Agu, 2007).

Population and Sample size

The population for this study is made up of fifteen (15) years

of Audited Accounts from the federal ministry of Finance,

Nigeria (2000 to 2014). The population of the study is small

and therefore forms our sample size. No sampling technique

was applied.

Data Analysis Techniques

Analysis of data according to Nwana (1981) in Akuezuilo &

Agu, (2007), refers to a technique(s) whereby the

investigator extracts from the data information that was not

apparently there before and which would enable a summary

description of the subject studied to be made.

In this study, the researcher, with the help of an expert,

applied the Statistical Package of Social Sciences (SPSS) to

analyze the research data. The data were tested, for equality

of variances using the Levene's test for homogeneity of

variances with a P-value >0.05. To test the hypotheses, a 5%

level of significance was adopted.

In testing hypotheses 1-5, we used t-test of difference.

According to Akuezuilo and Agu (2007), there are two

formulae for computing the t-value. They are unrelated or

independent and related or non-independent formulae. In

this study, we used an unrelated or independent formula

since our sample sizes are not equal and are less than 30.

The formula is given as;

Where;

X1 and X1 are for a mean of group 1 and group 2 respectively.

S1 and S2 are the standard deviations for group 1 and group2

respectively.

N = size of each group

It noted that this formula is used when the researcher

wishes to compare the mean scores of two unrelated

(independent) samples. Thus, using the mean scores

obtained by the two groups, and the standard deviations of

the scores of the two groups, you can calculate the t-value

using the formula above.

The t-test is a parametric statistics used to test the

significance of difference or relationship between statistical

procedures to be used when analyzing data which is less

than 30 in number.

The population means remains the most familiar measure of

central tendency and is represented by X and the formula

for calculating the mean is, N

XX ∑=

Where;

X = the mean

X = the score of each subject in the sample

N = number of subjects or items in the sample

∑ = sum of.

The correlation coefficient was used to test hypotheses 6 and

7 in order to establish the degree of relationship between the

pre-FRA capital expenditure budget and actual capital

expenditure and to compare it with the post-FRA capital

expenditure budget and actual capital expenditure to

determine if there is any significant difference. Pearson’s

Product correlation coefficient developed by English

statistician, Karl Pearson and called Pearson(r) has been

rated the most used measure of association (Bordens and

Abbott, 2002; Ujo 2000). The researcher who may want to

evaluate the direction and degree of relationship between

variables will find it most appropriate. According to

Akuezuilo and Ngozi (2007), it is a measure of the strength

of the linear relation between x and y variables.



The formula for Pearson( r) is given as

Where

r = Correlation coefficient

x = Independent variable = Capital expenditure budget

y = Dependent variable = Actual capital Expenditure

N = Number of paired x and y variables.

However, it is important to note that measures of correlation

are completely devoid of any cause and effect implication

(Chukwuemeka, 2006). The extent of the association,

relationship or correlation between two variables is usually

expressed as a coefficient called correlation coefficient. The

coefficient can range from – 1 through 0 to + 1. A stronger

relationship is indicated as the coefficient approached + 1 or

-1.

A negative correlation indicates that an increase in the value

of one variable is associated with a decrease in the value of

the second variable (inverse relationship). A positive

correlation indicates that the two measures increases or

decreases together (direct relationship) Bordens and Abbott,

2002).

Decision Rule

Reject Ho if P-value is less than 0.05, otherwise, we accept.

PRESENTATION AND ANALYSIS OF DATA

Presentation of Data

The data presented below in tables 4.06-4.10 were used with respect to the stated objectives in this work.

Table1: Expected/Actual Date of Publication of Audited Accounts of FGN (2000-2014).

Data for specific objective No. 1

Year Expected date or due

date of publication

Actual date of Publication

of Audited accounts

No of Months of

Default

2000 June 2001 Dec 12, 2002 18

2001 June 2002 Dec 31, 2004 30

2002 June 2003 Dec 31, 2004 18

2003 June 2004 April 11, 2008 10

2004 June 2005 April 15, 2008 34

2005 June 2006 May 7, 2008 23

2006 June 2007 Dec 31, 2008 18

2007 June 2008 May 15, 2009 11

2008 June 2009 Oct 22, 2009 4

2009 June 2010 Nov 5, 2010 5

2010 June 2011 Dec 21, 2012 18

2011 June 2012 Dec 27, 2012 6

2012 June 2013 Feb 20, 2014 8

2013 June 2014 April 16, 2015 10

2014 June 2015 NA NA

Sources: (1) Reports of the Accountant-general of the Federation, (2000-2014)

NA-Not is available.

Table 2: Nigerian Corruption Perception Index (2000-2014)

Data for specific objective No 2

Year Corruption Perception Index Inverse Ranking (%)

2000 90/90 = 90 out of 90 countries 100

2001 90/91 = 90 out of 91 countries 99

2002 101/102 = 101out of 102 countries 99

2003 132/133 = 132 out of 133 countries 99

2004 144/146 = 144 out of 146 countries 99

2005 152/168 = 152 out of 168 countries 91

2006 153/180 = 153 out of 180 countries 85

2007 147/180 = 147 out of 180 countries 82

2008 121/180 = 121 out of 180 countries 67

2009 130/180 = 130 out of 180 countries 72

2010 134/178 = 134 out of 178 countries 75

2011 143/183 = 143 out of 183 countries 78

2012 136/176 = 136 out of 176 countries 77

2013 144/177 = 144 out of 177 countries 81

2014 *146/178 = 146 out of 178 countries 83

Sources: CIA World Factbook, (2014)

*estimated



Table3: Total Federally Collected Government Revenue/Public Debt Servicing (2000-2014).

Data for specific objectives No 3

Year Total Federally Collected

Government Revenue (N’b)

Debt Servicing

(N’b)

Percentage of Debt Service to

total Government Revenue (%)

2000 1,906.2 130.0 6.9

2001 2,231.6 155.4 7.0

2002 1,731.8 163.8 9.5

2003 2,575.1 363.5 14.1

2004 3,920.5 382.5 9.8

2005 5,547.5 394.0 7.1

2006 5,965.1 289.5 4.9

2007 5,715.6 326.0 5.7

2008 7,866.6 372.2 4.7

2009 4,844.6 283.7 5.9

2010 7,303.7 542.4 7.4

2011 11,116.8 495.1 4.5

2012 10,654.7 559.6 5.3

2013 9,759.8 591.8 6.1

2014 *11,432.3 *601.1 5.3

Sources: 1. CBN Statistical Bulletin, (2008) Golden Jubilee

2. CBN Statistical Bulletin (2013)

3. CBN Annual Reports and Accounts (2014)

*estimated

Data Analysis

Our data in tables 1 to 3 above were analyzed using the t-test of significant difference and for table 4.10 the correlation

coefficient analysis was used.

T-Test of Significant Difference Analysis

A. To establish whether the implementation of FRA has led to the timely publication of Audited Accounts of Federal

Government of Nigeria.

In achieving objective one, we used the Test of difference between the mean number of months of default on publication of

audited accounts for pre-FRA and post-FRA. The result shows a significant difference in the means with a P-value < 0.05. Table

4.11 shows that the mean number of months of default on publication of audited accounts for pre-FRA is 17.2857 while that of

the post-FRA is 7.75. This shows a reduction in the mean number of months of default on publication of audited accounts from

pre-FRA to post-FRA. This reduction indicates that the introduction of FRA has affected the number of months of default on

publication of audited accounts positively.

Table4: Independent samples test on default months

Levene's Test

for Equality

of Variances Mean t-test for Equality of Means

F Sig. T df

Sig.

(2-

taile

d)

Mean

Differen

ce

Std.

Error

Differen

ce

95% Confidence

Interval of the

Difference

Pre-FRA Post-FRA Lower Upper

Number of Months

of Default on

Publication of

Audited Accounts

1.11

3 .311 17.2857 7.7500 2.251 13 .042 9.53571 4.23615 .38407 18.68736

Source: Field survey, 2018.

To ascertain if the implementation of FRA has reduced corruption index in Nigeria

Table5: Independent samples Test on corruption index.

Levene's Test

for Equality

of Variances Mean

t-test for Equality of Means

F Sig. T df

Sig.

(2-

tail

ed)

Mean

Differenc

e

Std.

Error

Differen

ce

95% Confidence

Interval of the

Difference

Pre-FRA Post-

FRA Lower Upper

Corruption

Index In % .069 .796 96.0000 76.875 6.622 13 .000 19.12500 2.88829 12.88523 25.36477




Achieving this objective, we used t-Test of the difference between the corruption index for pre-FRA and post-FRA. From table 5

above, the Leven’s test for the quality of variances shows that they are equal with a P-value greater than 0.05. Hence the test is

based on equal variances and the result shows that there is a significant difference between the two means with P-value < 0.05.

We observed that the mean corruption index reduced from 96.00 in pre-FRA to 76.88 in post-FRA.

To investigate whether the implementation of the FRA has reduced the percentage of public debt service to total

revenue of the Federal Government of Nigeria

To achieve the above objective, we used the t-test of the difference between the mean percentage of debt service to the total

revenue for pre-FRA and post-FRA. The result shows a significant difference in the means with P-value < 0.05. Table 6 below

shows that the mean percentage of debt service to the total revenue for pre-FRA is 8.4714 while that of the post-FRA is 5.6125.

This shows a reduction in the mean percentage of debt service to the total revenue.

Table 6: Paired samples test on percentage of debt service

Levene's Test

for Equality

of Variances


F Sig.

Mean

t df

Sig.

(2-

taile

d)

Mean

Differen

ce

Std. Error

Differenc

e

95% Confidence

Interval of the

Difference

Pre-

FRA

Post-

FRA Lower Upper

Percentage Of

Debt Service

Total

Government

Revenue

6.488 .024 8.4714 5.6125 2.581 13 .023 2.85893 1.10782 .46563 5.25222


To assess the extent to which the implementation of FRA has affected the total federally collected revenue by Federal


Here, we used the t-test of the difference between the mean amount of federally collected revenue for pre-FRA and post-FRA.

The result shows a significant difference in the means with a P-value < 0.05. Table 7 below shows that the mean amount of

federally collected revenue for pre-FRA is 3411.1143 while that of the post-FRA is 8586.7625. This shows an increase in the

mean amount of federally collected revenue from pre-FRA to post-FRA. This increase indicates that the introduction of FRA has

affected the amount of federally collected revenue positively.

Table7: Paired samples test on Nigeria total federally collected revenue

Levene's Test

for Equality

of Variances


F Sig.

mean

T df

Sig.

(2-

taile

d)

Mean

Difference

Std. Error

Difference

95% Confidence Interval

of the Difference

Pre-FRA Post-FRA Lower Upper

Total

Federally

Collected

Government

Revenue In

Naira

2.063 .175 3411.1143 8586.7625 -4.540 13 .001 5175.64821 1140.09372 -

7638.67096

-

2712.62547


A. To determine if the implementation of FRA affected the realization of the targeted Gross Domestic Product (GDP)

growth rate in Nigeria.

To achieve this, we used the t-test of the difference between the mean targeted Gross Domestic Product (GDP) for pre-FRA and

post-FRA. The result shows a significant difference in the means with a P-value < 0.05. Table 8 below shows that the mean

targeted Gross Domestic Product (GDP) for pre-FRA is 5.00 while that of the post-FRA is 7.03. This shows an increase in the

mean targeted Gross Domestic Product (GDP) from pre-FRA to post-FRA. This increase indicates that the introduction of FRA

has affected the targeted Gross Domestic Product (GDP) positively.

Table 8: Independent samples test on the mean GDP growth rate.

Levene's Test

for Equality of

Variances


F Sig.

Mean

T df

Sig.

(2-

tail

ed)

Mean

Differen

ce

Std.

Error

Differe

nce

95% Confidence Interval

of the Difference

Pre-

FRA

Post-

FRA Lower Upper

GDP

Budget

Target

.797 .388 5.0000 7.0300 -2.957 13 .011 2.03000 .68640 -3.51288 -.54712




Correlation Coefficient Analysis

To find out whether the implementation of FRA has contributed to the relationship between the capital expenditure budget and

actual capital expenditure of the Federal Government of Nigeria.

Here, we considered the correlation coefficient(r) for the pre and post FRA as in Tables 9 and 10 below respectively at 5% level

of significance. The correlation coefficient between pre-FRA budgeted capital expenditure and pre-FRA actual expenditure is

0.650 with a p-value >0.05. This shows that pre-FRA budgeted expenditure and pre-FRA actual expenditure is not significantly

correlated. The correlation coefficient between post-FRA budgeted capital expenditure and post-FRA actual expenditure is

0.919 with a p-value < 0.05. This shows that post-FRA budgeted expenditure and post-FRA actual expenditure is significantly

correlated. This means that the actual capital expenditure is closely related to the capital budget since the introduction of FRA.

This implies that budget implementation has been very effective as against what was happening before the introduction of FRA.

Table9: Paired Samples Correlations on pre FRA budget/actual performance.

N Correlation Sig.

Pair 1 PRE FRA BUDGET & PRE FRA ACTUAL 7 .650 .114


Table10: Paired Samples Correlations on post FRA budget/actual performance.

N Correlation Sig.

Pair 1 Post FRA Budgeted & Post FRA Actual 8 .919 .001

Source: Field survey, 2018

Test of Hypotheses

Test of Hypothesis One

H0 : The implementation of the FRA has not significantly influenced the timely publication of Audited Accounts of the Federal


H1 : The implementation of the FRA has significantly influenced the timely publication of Audited Accounts of the Federal


The fitted trend equation on table 11 shows that there is a significant negative trend in the number of months of default on

publication of audited accounts over the years. The prediction model of Yt=1660.807- 0.821t shows that as the year increases,

the number of months of default on publication of audited accounts decreases. Also, there is a negative movement with regard

to the number of months of default in the publication of Audited Accounts of FGN. The coefficient of determination (R-square)

is 0.156 while the slope of the trend equation is -0.821.

Table11: Fitted trend equation on FRA for audited accounts

Model Unstandardized Coefficients Standardized Coefficients

T Sig R square B Std. Error Beta

(Constant)

YEAR

1660.807

-.821

1063.190

.530 -.395

1.562

-1.551

.042

.o47 0.156

A. Dependent Variable: NUMBER OF MONTHS OF DEFAULT ON PUBLICATION OF AUDITED ACCOUNTS

Source; Field survey, 2018.

Decision rule: Reject the null hypothesis if P-value is less than 0.05; otherwise we accept the alternate hypothesis.

Conclusion: Since the P-value of 0.042 is less than 0.05, we, therefore, reject the null hypothesis and accept the alternative

which says that the implementation of the FRA has significantly influenced the timely publication of Audited Accounts of the

Federal Government of Nigeria over the years.

Test of Hypothesis Two

H0: The implementation of FRA has an insignificant negative effect on Nigeria’s corruption index.

H1: The implementation of FRA has a significant negative effect on Nigeria’s corruption index.

The fitted trend line of table 12 below shows that there is a significant negative trend in the corruption index over the years.

Also, the prediction model of Yt= 4020.954 – 1.961t tells us that as the year increases the corruption index decreases.

Table12: Fitted trend equation on FRA for Nigeria’s corruption index


t Sig. R square B Std. Error Beta

1 (Constant)

YEAR

4020.954

-1.961

876.329

.437 -.780

4.588

-4.491

.001

.001 0.608

B. Dependent Variable: CORRUPTION INDEX IN %


Decision rule: Reject the null hypothesis if P-value is less than 0.05; otherwise we accept the alternate on.



Conclusion: Since the P-value of 0.001< 0.05, we reject the null hypothesis and accept the alternative which states that the

implementation of FRA had a significant negative effect on the corruption index over the years.

Test of Hypothesis Three

H0 : The implementation of FRA has not significantly reduced the percentage of debt service to total government revenue over

the years

H1 : The implementation of FRA has significantly reduced the percentage of debt service to total government revenue over the

years

The fitted trend equation of Yt= 621.949 – 0.306t as derived from table 13 shows that there is a significant negative trend in the

percentage of debt service to total government revenue over the years. The model clearly indicates that as the year increases,

the percentage of debt services to total government revenue decreases to some extent. Fig. 4.04 also shows the movement. The

coefficient of determination is 0.292 while the slope of the trend equation is -0.306.

Table13: Fitted trend equation on FRA for the percentage of debt service to total government revenue


T Sig. R square B Std. Error Beta

1 (Constant)

YEAR

621.949

-.306

265.680

.132 -.540

2.341

-2.315

.036

.038 0.292

Dependent Variable: Percentage of Debt Service Total Government Revenue


Decision rule: Reject the null hypothesis if P-value is less

than 0.05; otherwise we accept the alternate hypothesis.

Conclusion: Since the P-value of 0.036 < 0.05, we reject the

null hypothesis and accept the alternative which says that

the implementation of FRA has significantly reduced the

percentage of debt service to total government revenue over

the years.

Discussion of Findings

One of the findings of this study revealed that the

introduction of FRA has affected the number of months of

default on publication of federal government accounts

positively. In table 11, the pre-FRA and post-FRA means

were considered. The pre-FRA was 17.2857 as against the

post-FRA which is 7.7500. This clearly shows reductions in

the mean number of months of default on publication of

awaited accounts. This indicates that there is an

improvement to reduce the number of months of default.

However, Ogujiuba, Ezema, and Omoju (2013) found out that

public finance in Nigeria has not been operated within the

specification period as expressed in the budget. Also Aliyu,

(2010: unpublished) noted that the presence of FRA during

the period 2005-2009 was not noticed with regards to the

timely publication of Audited Accounts of the federal

government.

Another finding of the study again revealed that there is a

reduction in the mean corruption index of Nigeria after the

introduction of FRA. We observed that in table 12, the mean

corruption index reduced from 96.00 in pre-FRA to 76.88 in

post-FRA. This shows the extent to which corruption has

gone down with the implementation of FRA from 2007. This

finding did not agree with Ogujiuba, Ezema and Omoju

(2013) which identified large scale corruption in public

expenditure management in Nigeria even at the presence of

FRA. Also, Nwankwo (2014) found out that the level of

corruption in Nigeria over the years has a significant

negative impact on the economic growth and Osisioma

(2012) observed that corruption has stultified growth and

national development.

Our study also revealed that there is a reduction in the mean

percentage of debt service with regard to total government

revenue. Table 13 in the work shows that the mean

percentage of debt service to total revenue for pre-FRA is

8.4714 while that of the post-FRA is 5.6125 indicating

reduction in the mean percentage. This finding is not in

consonance with Aliyu (2010) who said that there is a

growth in the total debt service even though it fluctuates, the

cost of debt service seem not to indicate the presence of

fiscal responsibility.

CONCLUSION AND RECOMMENDATIONS

Conclusion

This work examined the effect of fiscal responsibility Act on

budgeting and accountability practice in Nigeria for the

period 2000-2014. Specifically, the study examined the time

frame for the publication of audited accounts of FGN,

corruption perception index, percentage of public debt

service to total revenue, federally collected revenue, targeted

GDP growth rate and the relationship between the capital

and actual expenditure budget of the federal government of

Nigeria.

From the available data, the implementation of the Fiscal

Responsibility Act showed some significant effects on the

budget and accountability practice in Nigeria public sector.

Before the implementation of FRA, 2000-2006, it was

observed that the number of months of default on the

publication of auditing accounts of FGN was higher than the

post period. This implies that in the post-FRA, the

government was more responsible in her fiscal dealings than

the pre-FRA period, probably because of the fiscal control act

in place.

On the corruption perception index of Nigeria by the

international community, the mean corruption in the pre-

FRA is higher by 19.12500 percent. As it is, Nigeria has

moved from 100 percent inverse ranking to 81 percent as of

2013 indicating a reduction in corruption. However, it

should be noted that the commission on FRA worked in

complete harmony with other anti-graft agencies in the fight

against corruption. The mean percentage of public debt



service to total government revenue in the pre-FRA is higher

than the post-FRA period which means that in the pre-FRA

the country spent more money in servicing her debt than in

the post-FRA. This implies that there has been a negative

trend in the percentage of debt service to total government

revenue over the years.

Conclusively, it was found out that the relationship in the

budgeted capital expenditure against the actual post-FRA.

What this means is that the actual expenditure budget is

closely related to the capital budget in the post-FRA unlike

what is obtained in the pre-FRA period. This implies that

budget implementation has been very effective with the

implementation of the FRA.

Recommendations

In line with the above findings and conclusion, we

recommended as follows;

1. That the federal government of Nigeria should continue

the implementation of the FRA as a reform program

more aggressively. This is necessary for the economic

growth and advancement of the country’s macro-

economic indices like the GDP, corruption index and so

on.

2. 2. Budgeting and accountability practice should be made

more proactive by imbibing timely auditing and

reporting standard as stated in section 49 and 50 FRA.

That is to say, that our audit institutions should be

strengthened to be able to carry out the responsibilities

which the reform demands of them.

3. The actual capital expenditure budget should be made

more closely related to budgeted capital expenditure.

This will ensure the provision of democracy dividends

among the citizenry in terms of social and economic

amenities.

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Education

Effect of Fiscal Responsibility Act on Budgeting and Accountability Practice in Nigeria